Chapter 1, Entrep
Chapter 1, Entrep
Chapter 1, Entrep
Entrepreneurship
The capacity and willingness to develop, organize and manage a business venture along with any
of its risks in order to make a profit.
Who is an Entrepreneur?
o Entrepreneur is a person who starts and or operates a business. An entrepreneur is creative and
innovative. A person who starts something new.
o An entrepreneur may be male or female, young or old, professional, college graduate or school
dropout, comes from A,B,C,D and E economic group.
Opportunity Seeking
Essential to an entrepreneur’s opportunity seeking are the opportunity entrepreneurial mind frame,
heart flame and gut game.
Allows the entrepreneur to see things in a very positive and optimistic light in the midst of crisis
or difficult situations.
If there is one commonality between an inventor and an entrepreneur, it is their surging passion
or the entrepreneurial heart flame.
Passion is that great desire to attain a vision or fulfill a mission
The heart flame is also about emotional intelligence or EQ.
Entrepreneurial gut game
This refers to the ability of the entrepreneur to sense without using the five senses. This is also
known as intuition.
4. Micro market
The macro environment refers to the “big or macro forces” that affect the area, the industry,
and the market which the enterprise belongs to
The macro environment forces can be divided into five categories composed of the Social,
Political, Economic, Ecological and Technological dimensions or SPEET.
The socio-cultural environment includes the demographics and cultural dimensions that govern
the relevant entrepreneurial endeavor.
The political environment defines the governance system of the country or the local area of
business.
Supply and demand forces mainly drive the macro economic environment.
The ecological environment includes all natural resources and the ecosystem, habitat of men,
animals, plants and minerals.
1.5 Technological Environment
New scientific and technological discoveries, which often lead to the launch and
commercialization of new products with superior attributes or to rendering the old ones
obsolete, are the entrepreneur’s nightmares.
Examples of opportunities that are present within the macro environment of a fast-growing fast food
chain offering chicken meals and other Filipino favorites
After the macro environment, the next biggest sources of opportunities are the industry and the market.
1. Rivals or competitors in a particular type of business. True rivals or competitors are those
competing for the same or similar markets
The entrepreneur must also be able to measure the actual demand and supply as well as the
potential demand and supply of the industry that the enterprise belongs to.
4. Micro market
Refers to the specific target market segment of a particular enterprise. These are the target
customers that represent the immediate customers of an enterprise.
It likewise pertains to a clearly defined location or specific customer group that an enterprise
whishes to serve
The need for segmentation would be crucial in micro market analysis because the definition of
value for money differs from group to group.
Another potential source of opportunity is the entrepreneur’s own set of skills or expertise, or hobby.
Other sources
2. People’s tastes in clothes, music, shoes, entertainment, dance, sports, hobbies and even careers
have evolved over the years
4. Before the customer won over, there is first a battle for the mind. Next there is a battle for the
heart. Finally, there is a battle for the wallet.
5. The longer the customer wants to use the product, the greater the chances of creating lasting
loyalty
6. Opportunities abound in shaping consumer perceptions or occupying spaces in their minds or
places in their hearts that have not yet been filled.
7. New inventions, new systems and work processes, new insights about the human psyche, new
applications for old knowledge, new revelations about how the physical world works, new
interpretations, new combinations based on the converge of previous technologies, new
outlooks about how life should be led, and a host of other new things are tremendous sources
of opportunities.
8. Determining personal preferences and competencies lay the foundation for a new business
venture
9. Unexpected occurrences in both the external and internal environment of the enterprise
indicate that significant changes are happening and opportunities are sprouting
Opportunity Screening
In screening opportunities, the entrepreneur first has to consider his or her preferences and
capabilities by asking three basic questions:
2. Will I spend all my time, effort, and money to make the business opportunity work?
3. Will I sacrifice my existing lifestyle, endure emotional hardship, and forego my usual comforts to
succeed in this business opportunity?
The 12 Rs of Opportunity Screening
2. Resonance to values.
6. Reach. Opportunities that have good chances of expanding through branches, distributorships,
dealerships, or franchise outlets in order to attain rapid growth are better opportunities.
7. Range. The opportunity can potentially lead to a wide range of possible product or service
offerings, thus, tapping many market segments of the industry.
8. Revolutionary Impact.
9. Returns
12. Risks.
The ultimate goal of doing the opportunity screening matrix is to narrow down the many
opportunities into one or two most attractive ones. The next step is to conduct a pre-feasibility
study to ascertain the viability of the opportunity.
The entrepreneur must go down to the details and take time to consider the following factors
that are contained in a pre-feasibility study:
A. Market potential and prospects
B. Availability and appropriateness of technology
C. Project investment and detailed cost estimates
D. Financial forecast and determination of financial feasibility
Market potential is based on the estimated number of possible customers who might avail of
the product or service.
Segmenting the market
Using a set of demographics will be the most basic approach in determining the target segment.
Assessing competition
Market potential can also affected by the number of establishments supplying and serving your
target customers.
After estimating the number of potential target market or segment, the next thing that the
entrepreneur should assess is the potential market share he or she can attract.
In order to get the enterprise going, the entrepreneur must go through the intricacies of detailing the
operations that would be required by the business, which also includes technology assessment.
There are at least four target customer expectations affecting the scale and complexity of an
enterprise’s operations:
1. Quantities demanded.
Now comes the challenging part, the entrepreneur needs to determine how much money is
needed to start the business opportunity with consideration to the technologies and operating
levels required.
Three investments that need to be funded:
1. Pre-operating cost- These are the costs related to the preparation for launch of the business.
2. Production/Service facilities investment- This refers to the long term investment for the actual
business establishment.
3. Working capital investment- This includes the investment needed to operationalize the
business.
Upon completing the first three parts of the pre-feasibility study, the entrepreneur should now be able
to proceed in constructing his or her enterprise’s financial forecast for the business.
Financial forecasting calls for the creation of the four critical financial statements: namely, (1) income
statement; (2) balance sheet, (3) cash flow statement; (4) funds flow statement.
Income Statement
The income statement is a financial statement that measures an enterprise’s performance in terms of
revenue and expenses over a certain period
Balance Sheet
Creating a balance sheet is a bit more complicated because one has to look at three different things:
assets, liabilities and equities.
Asset represent all the investments in the enterprise including the initial investments that you
considered in the pre-feasibility study.
Liabilities –represent the enterprise’s debts to suppliers, to banks, to government to employees and
other financiers.
Stockholders equity –represents the investors’ investments in the stock (or shares) of the business.
In any business endeavor, the investor or the entrepreneur himself or herself will always be interested
in knowing the payback period or how long will it take for him or her to get back what he or she has
invested in the enterprise.
For bigger projects that entail millions of pesos worth on investments, a full-blown feasibility study
might required more than the pre-feasibility study.
In writing the feasibility study, the entrepreneur should take into consideration the following:
1. A more in-dept study of market potential to ensure that the business proposal will reach the
forecasted sales figures;
2. Proof that the product or service being offered has the right design, attributes, specifications,
and preferred features;
3. Proof that the entrepreneur and his or her team have the necessary experience, skills and
capabilities to maximize the venture’s chances of success;
4. Legal visibility
5. More detailed costing on the different assets and more justification for the production and
operating expenses; and
6. More thorough analysis of the technology and its sustainability
Opportunity Seizing
After opportunity seeking and screening, the entrepreneur is ready for Opportunity Seizing, the
final stage.
It is important for the entrepreneur to establish the positioning of the business enterprise in the
marketplace.
In order to craft a positioning statement, the entrepreneur is advised to look at other competitors (or
substitutes) in the marketplace.
Going through the process of questioning the entrepreneur will be able to come up with each of the
competitors Main Value Proposition (MVP) and from there, work on his own positioning.
The following key points can help out the entrepreneur on how to go about this questioning.
2. What are the different product attributes and features of each of the competitors?
4. What are the market preferences of consumers when it comes to the products being offered?
After making an assessment of the competing products, the entrepreneur must then conceptualize his
or her own products.
A concept is an idealized abstraction of the product or service to be offered to the preferred market of
the entrepreneur.
In order to come up with the product or service concept, the following options or directions may be
considered by the entrepreneur:
1. The first is to create a concept similar to the winning products in the marketplace and ride with
the obvious market trends.
2. The second is to find a market niche that has not been filled by the competitors.
3. The third is to conceptualize a product in an positioning category where the participants are
rather weak
4. The fourth is to conceptualize a product that would change the way customers think, behave
and buy, thus, making existing products ‘obsolete’ and ‘old fashioned’
From conceptualization, the entrepreneur proceeds to the design, prototyping and testing of the
concept.
Designing means that the entrepreneur must render the concept and translate it into its very physical
and very real dimensions.
Good planning and good programming are essential to have good implementation.
A good planner and programmer must make several important choices to achieve the desired results.
Fourth is to specify the systems and procedures that would govern the enterprise, motivate and
discipline the work force, and satisfy the customers.
Fifth is to design the organizational architecture that would allow the people to function at their best.